According to a landmark study by the Incentive Federation, corporations in the United States spent more than $90 billion on non-cash incentives in 2015—a figure that represents a 17% increase from prior years and still continues to grow. The employee incentives industry is booming. Companies devote increasing amounts of money to merchandise, cash, and travel incentives, all in pursuit of increased employee engagement.
From an employee perspective, this upward trend is a positive sign that companies are actively invested in their satisfaction and wellbeing. But the outlook isn’t so clear from the eyes of company leaders. Even as they sign the checks for employee incentive programs, CEOs and HR professionals continue to wonder… Do incentive programs really work?
Do Incentive Programs Work?
When incentive programs are designed around what really matters to employees, and implemented in such a way that they can be maintained for a long enough period of time, they work. It’s as simple as that. Obviously, finding the perfect cocktail of high-value rewards and achievable goals can be quite difficult for company leadership. But companies that get it right see results that speak (and pay) for themselves.
According to the Incentive Federation study, 93% of top-performing companies report that their executives are “strong supporters” of employee incentive programs. These leaders see incentive programs as a valuable investment in their company’s competitive edge.
Well-designed incentive programs work because they give employees the benefit that matters most: recognition. Today’s market is flooded with high performers seeking greater opportunity in the corporate world. Employees hold the power in today’s job market, and employers are vying for each other to collect the best talent.
Basic perks and fringe benefits are a wash at this stage in the game. Employees know they can get these perks from just about any job. What they’re really looking for is a position that will offer a deeper sense of satisfaction, purpose, and fulfillment. The only way companies can meet this need for esteem is by setting up a comprehensive system of recognition. Incentive programs are the simplest way to systematize this process and ensure that every employee feels appreciated for the hard work they put in every day.
One Real-Life Example of a Thriving Incentive Program
So far, the argument for incentive programs has been mostly theoretical, and we all know that statistics don’t tell the whole story. To understand the true potential of incentive programs, you need to see a real example of a program that’s actively working to change employees’ lives. Enter Comcast and their incentive program, Pyramid of Excellence.
The Pyramid of Excellence program has succeeded in rewarding Comcast employees across all achievement levels for nearly ten years running. The premise is simple: employees earn branded apparel by meeting regularly-spaced performance goals. The apparel is high quality and relatively inexpensive when compared with cash bonuses or free vacations—which makes the PoX program highly cost-effective for the Comcast team and ensures a high ROI.
The PoX program works so well because Comcast leaders figured out how to put a price tag on bragging rights. Listen to their employees talk about how proud they are to wear their gear. Comcast has seen firsthand how an incentive program can effectively tap into the value of social currency. By leveraging intrinsic motivation and peer recognition, Comcast leaders created an elite program that raised the caliber of their entire workforce and elevated customer experience across the board.
Understanding Why Some Incentive Programs Fail
Unfortunately, many companies never see the same level of success with their incentive programs. Maybe they don’t have the participation numbers to make the program worthwhile, or they’re not seeing a high enough return to continue the program for a long enough period of time. Sometimes, incentive schemes really do fail. The good news is that the reasons for failure are often straightforward and easy to identify.
If your incentive program isn’t bringing the results you expect, you might be dealing with the following problems:
- Setting goals that only the top 5% of employees can feasibly achieve.
- Offering rewards that don’t incentivize a large percentage of your workforce.
- Implementing a program structure that doesn’t reward often enough, or for long enough.
- Updating an incentive program too infrequently, ending up with stale rewards.
- Lacking bandwidth to revise an existing program or create a new one from scratch.
Start Your Incentive Program
These problems may be common, but we know they’re not easy to solve.
If your company is currently spending money on an incentive program that doesn’t work, it’s high time that you make a change. Contact an employee incentives firm. The right company can consult with you about these issues and take over the management of your program, which is especially helpful for leaders who don’t have the bandwidth to tackle these challenges on their own. With the right help, you’ll finally be able to implement an employee incentive program that actually delivers on its promises.
At Inproma, we believe every company needs a powerful and effective way to incentivize their employees. Through nearly two decades in business, we’ve taken countless failed incentive systems and transformed them into fully functioning programs that increase employee engagement. Do our incentive programs work? We’d be happy to show you the evidence. Let’s talk.